If Coke and Pepsi are close substitutes, then if:
A) Coke raises its price, so will Pepsi.
B) Coke raises its price, it will not lose customers to Pepsi.
C) Pepsi lowers its price, it will not hurt Coke.
D) Pepsi lowers its price, so will Coke.
E) Coke raises its price, some customers will switch to Pepsi.

Question

Quizplus · Accepted Answer

If Coke and Pepsi are close substitutes, then the customers have the option to switch to Pepsi if Coke raises its price. Therefore, when Coke raises its price, some customers will switch to Pepsi, making option E the best choice.

If Coke and Pepsi Are Close Substitutes, Then If